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Customers of major high street bank can earn £900 interest on savings account – but there’s a catch
Interest paid on the account is fixed for a year
CUSTOMERS of a major bank could earn themselves an extra £900 if they sign up to one of its savings accounts.
Nationwide is offering a one-year fixed rate cash ISA with a 4.5% interest rate.
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However customers must deposit £20,000, the annual tax-free ISA (individual savings account) allowance, in to their account to expect a return of £900.
Customers who choose to invest £10,000 into the ISA over the space of a year should expect a return of £450, Nationwide Building Society has revealed.
An ISA is a type of savings account where you can earn interest free of tax every year, up to the £20,000 limit.
There are different types of ISA such as cash or stocks or shares, plus some accounts are easy access meaning you can withdraw cash any time, while others are fixed.
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In the case of the Nationwide fixed-rate cash isa, your cash will be tied up for a year but the rate of interest will be fixed for that time too.
If you withdraw cash early from a fixed term savings account you may lose the rate of interest, or even be charged a fee, so always check the terms and conditions first.
In the case of there's an early access charge if you do access the cash early.
It's also worth noting that to get the full £900 interest, you'd also have to deposit the maximum of £20,000 at the start of the year.
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But it's also always worth checking around to make sure you're getting the best rate of interest on your savings.
For instance you can get a better rate of 4.8% with Punjab National Bank, 4.75% with Virgin Money and 4.&% with Castle Trust.
How you can find the best savings rates
If you are trying to find the best savings rate there are websites you can use that can show you the best rates available.
Doing some research on websites such as MoneyFacts and price comparison sites including Compare the Market and Go Compare will quickly show you what's out there.
These websites let you tailor your searches to an account type that suits you.
There are three types of savings accounts fixed, easy access, and regular saver.
A fixed-rate savings account offers some of the highest interest rates but comes at the cost of being unable to withdraw your cash within the agreed term.
This means that your money is locked in, so even if interest rates increase you are unable to move your money and switch to a better account.
Some providers give the option to withdraw but it comes with a hefty fee.
An easy-access account does what it says on the tin and usually allow unlimited cash withdrawals.
These accounts do tend to come with lower returns but are a good option if you want the freedom to move your money without being charged a penalty fee.
Lastly is a regular saver account, these accounts generate decent returns but only on the basis that you pay a set amount in each month.
You can also currently get a slightly higher rate of 4.63% on a one year fixed cash Isa from Kent Reliance building society, 4.6% from United Trust Bank and 4.55% from Charter Savings Bank.
Paragon Bank also offers the same rate of 4.5%, according to Moneyfactscompare.
Isa savings accounts can be useful if you have a fair bit of savings since they are tax-free.
Most people can earn a certain amount each year tax-free in any type of account with the personal savings allowance.
It's £1,000 for those who pay tax at the basic rate (20%), and £500 for those who pay the higher rate (40%).
As income tax thresholds have been frozen for several years, the rise in savings rates means more people are being drawn into having to pay tax on any interest earned on their savings and making Isas more attractive.
But there are other accounts that could be better suited to anyone where this isn't an issue.
The best easy access account currently available is Ulster Bank's loyalty saver offering 5.2%.
An easy access account means y can withdraw and deposit cash when you want, but the rate can change at any time.
Investec is offering 5.25% on its notice savings account, where you need to give 90s day notice of your withdrawal.
You can even get rates as high as 8% with Principality building society or 7% with First Direct with a regular saver accounts.
These tend to offer higher rates but the amount you can save each month is limited to just a couple of hundred pounds.
Caitlyn Eastell, a spokesperson at Moneyfactscompare.co.uk, said: "It is crucial savers keep on top of the changing market and make the switch to ensure they are not getting a raw deal, especially as we have seen some of the top rate deals drop below 5 per cent.
"It would not be too surprising to see more providers adjusting their rates in reaction."
Meanwhile another bank has offered customers a chance to win £500 each month with a new savings account.
Coventry Building Society has launched the “Sunny Day Saver”, a regular savings account with an interest rate of 6.25%.
A regular savings account lets you put aside money up to a set amount each month for a certain period, which is usually a year.
All savers who pay in at least £10 a month into this account will also be entered into a prize draw to win one of 20 cash prizes worth up to £500 each month.
SAVINGS ACCOUNT TYPES
THERE are four main types of savings accounts fixed, notice, easy access, and regular savers.
Separately, there are ISAs or individual savings accounts which allow individuals to save up to £20,000 a year tax-free.
But we've rounded up the main types of conventional savings accounts below.
FIXED-RATE
A fixed-rate savings account or fixed-rate bond offers some of the highest interest rates but comes at the cost of being unable to withdraw your cash within the agreed term.
This means that your money is locked in, so even if interest rates increase you are unable to move your money and switch to a better account.
Some providers give the option to withdraw, but it comes with a hefty fee.
NOTICE
Notice accounts offer slightly lower rates in exchange for more flexibility when accessing your cash.
These accounts don't lock your cash away for as long as a typical fixed bond account.
You'll need to give advance notice to your bank - up to 180 days in some cases - before you can make a withdrawal or you'll lose the interest.
EASY-ACCESS
An easy-access account does what it says on the tin and usually allows unlimited cash withdrawals.
These accounts tend to offer lower returns, but they are a good option if you want the freedom to move your money without being charged a penalty fee.
REGULAR SAVER
These accounts pay some of the best returns as long as you pay in a set amount each month.
You'll usually need to hold a current account with providers to access the best rates.
However, if you have a lot of money to save, these accounts often come with monthly deposit limits.
There are 220 prizes up for grabs in total and all winnings will be paid directly into the customer’s savings account.
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Each month there is one £500 prize, five worth £200 and 14 £50 winnings.
Savers can squirrel away up to £150 a month into this account for a year but there is no obligation to pay in every time.
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